Across the Nation

WASHINGTON — Increased vigilance, not new government rules, is the best way to handle risks in the trillion dollar hedge fund industry, the Bush administration and regulators said Thursday.

Officials put forward guidelines they said should be followed by fund investors and institutions such as banks and brokerage houses that do business with the funds.

The guidelines, said Treasury Secretary Henry M. Paulson, "should serve as a foundation to enhance vigilance and market discipline further, which will strengthen investor protection and guard against systemic risk.”

Business groups supported the hands-off approach. Critics said the growing size of hedge funds — they top $1 trillion in the United States — and some spectacular failures such as last fall’s collapse of Amaranth Advisors showed the need for greater controls.

Hedge funds can invest in anything from commodities to real estate. By comparison, mutual funds generally hold stocks and bonds. Some hedge funds even buy entire companies; others buy and sell stocks like day traders, but with billions of dollars at stake.

U.S. hedge funds now number more than 9,000. They traditionally have catered to the rich, as well as pension funds and university endowments, but increasingly are luring less wealthy investors. The funds operate with minimal government supervision.

The recommendations came from the President’s Working Group, formed after the 1987 stock market crash. Paulson leads the group, which also includes the heads of the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission. The guidelines stress the need for more information so investment decisions are based on accurate and timely assessments.

Officials say more money needed for port security

LONG BEACH — More money is needed to safeguard the nation’s ports, three ranking members of congressional committees on terrorism and security said Thursday.

"We need to increase the resources that are going to protect our ports,” U.S. Rep. Loretta Sanchez, D-Calif., said during a news conference at the Port of Long Beach.

The port and its sister facility in Los Angeles comprise the nation’s largest port complex.

Sanchez, who chairs the Subcommittee on Border, Maritime and Global Counter-Terrorism, called on President Bush to fully fund the Port Security Grant Program.

The administration’s 2008 budget provides $210 million for the programs — about half the $400 million requested by supporters.